Apple Low-Balled Outlook -- Again

Proper reporting notes Jobs' history of low guidance, and investors should heed it.
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The Business Press Maven loathes the obvious, and I never thought I'd have to make such a contemptibly obvious point as the one I'm about to make again. But since the business press makes the same quarterly mistake about Apple (AAPL) - Get Report as naturally as a sentient human draws breath -- well, here I go again.

Here is how Apple works: For about the last half dozen quarters and, truly, for the better part of its history, the company has downplayed future expectations only to surpass them.

They Just Don't Get Apple's Numbers!

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For two reasons, a good portion of the business media consistently falls for the ruse.

1. They have the sense of history of a tsetse fly and fall for all manner of ruse.

2. Steve Jobs throws them off. Jobs is incredibly and famously promotional when unveiling products, but when he talks numbers he has always been just the opposite -- a conservative player, sandbagging like there is no tomorrow. His dual nature throws people off.

This brings us to Tuesday afternoon's guidance, termed "disappointing" with no qualifiers by much of the business media. Granted, the Business Press Maven this time agrees with the concern because iPod sales have slowed, and the consumer is running into a buzz saw, which will affect his ability to buy funky gadgets.

But considering Apple's long history of downplaying future expectations, you'd figure the defining propensity should at least be mentioned, if not prominently, in articles about future guidance, right? You didn't really ask that, did you?

A few business journalists did -- and we are going to point them out by name. And though The Business Press Maven rarely criticizes by name -- my goal is to teach investors, not publicly flog journalists -- this qualifies as such a glaring repeated mistake that I must, if only to forewarn investors who may read these journalists about Apple in the future.

First, some good apples. Four, to be exact:

Rex Crum, who writes for


, please step down for a pat on the head. You mentioned that Apple downplays in

the second sentence, giving investors the perspective they need and deserve to make a judgment on what Apple may/may not be doing this time:

"Apple Inc. on Tuesday reported a first-quarter profit that rose 58% from a year ago, but the company's shares tumbled in after-hours trading as the consumer-electronics maker gave an earnings outlook that fell short of Wall Street analysts' forecasts. Apple typically gives conservative forecasts... "

Kevin Allison from

The Financial Times

, The Business Press Maven is nodding in your general direction. By

the third sentence, you were introducing Apple's history of sandbagging.

Eric Savitz,


tech maven, posted on the earnings right after their release. In

sentence number four, Savitz makes sure you know the lay of Apple's land: "I would point out here that while the forecast is short of expectations, Apple has developed a reputation for issuing low-ball estimates."

The Wall Street Journal's

Nick Wingfield, you did better than wing it. Appearing in

the fifth sentence is the phrase: "history of providing conservative financial forecasts that it later handily exceeds." Nice work, my man. You did not pull the wool over investor eyes.

Now let's go lay our souls to siege while checking out a few bad apples, those who failed to mention Apple's well-established past history of downplaying future expectations.

Over at

The New York Times

, Laura M. Holson prattled on about seasonal slowdowns, iPod troubles,


(S) - Get Report



(INTC) - Get Report

in an article titled: "

Apple Earnings Up, but Stock Falls on Outlook."

But the article said nothing -- nary a thing -- about the company's history of playing the expectations game on those outlooks. Bad stenographer, bad!


Sam Gustin wrote an article called: "Apple Grows, but Investors Don't Bite:Forecasts of slowing growth lead investors to pummel the company's stock in after-hours trading. "

But guess what?

Not word one about the nature of the company's past forecasts. Sense of history, thy name is not Sam.

All we get is this:

"The company's finance chief, Peter Oppenheimer, called it "our best year ever." But investors were looking to the future, not the past, and they didn't like Oppenheimer's forecast for the second quarter: earnings of 94 cents a share on sales of $6.8 billion. That is below analysts' estimates for earnings of $1.09 a share on revenue of $6.99 billion."

Anyhow, we can go on publicly flogging members of the business media for this essential oversight. I rather like it. But the larger point is that you, the savvy investor, must always look at Apple forecasts with a critical eye. Even when the business media acts as remedial students of history and even when Apple, as in this case, might have an actual issue or two going forward.

At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.

Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;

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